CRYPTO CLASS - Smart Contracts
A smart contract is a computer program that automatically executes a transaction when certain conditions are satisfied.
A simple smart contract metaphor is a vending machine. The buyer selects an item, inserts payment and the machine delivers the item.
Smart contracts on the blockchain could include registering a vehicle, sending notifications, issuing a ticket, or even transferring ownership of real estate.
When the transaction is competed, the blockchain is updated. Parties to the contract determine the rules that control the transaction and define a framework for resolving disputes.
There are multiple benefits of a smart contract:
▸ Speed, accuracy, and efficiency. The contract is executed immediately after the conditions are met. Since there is no paperwork and no errors to correct, smart contracts are faster and more accurate.
▸ Transparency and trust. Since there are no third parties and all documents are encrypted, no one will question whether the information was altered.
▸ Security. Blockchain documents are encrypted and distributed. They are safe from hackers because a hacker would need to alter the entire chain to change a single record.
▸ Savings. There are no third parties, such as lawyers or banks, involved in the smart contract. This reduces transaction costs.
Ethereum is the most popular smart contract platform.